By: Gigaom
June 30, 2012 at 13:29 PM EDT
TechStars’ David Cohen on transparency, growth and funding trends
TechStars' founder and CEO David Cohen talks about the booming tech community in Boulder, the changing landscape for startups and the future of man and machine.

When TechStars launched in 2006, it was intended to be a startup program for the mellow mountain town of Boulder, Colo. Six years later, it’s spread to four other cities, spawned an international network of accelerators, led to a book, inspired a Bloomberg reality TV show, and has helped boost Boulder’s name as a hotspot for innovation. But when you ask CEO and co-founder David Cohen about the success, he shrugs it off.

“I never imagined it would be anywhere but Boulder, never imagined all the great [things]… happening around it,” Cohen says. “You never know where these things are going to go. The fundamental belief I have is that you do what you love and the rest happens.”

(If only it were that easy for every entrepreneur: TechStars itself accepts just one percent of its applicants)

In Cohen’s office at the TechStars headquarters in downtown Boulder (where a nifty receptionist iPad app greeted me at the door), we talked about the booming tech community in Boulder, the changing landscape for startups and the future of man and machine. Here’s a (lightly edited) transcript of our conversation.

KH: How has TechStars changed since you launched in 2006?

DC: Most notably is the geography – we’re in five places. When we started it here in Boulder, it was conceived as a better way to angel invest. But a big part of it was to improve the entrepreneurial community here. When you talk about Seattle, we have a similar kind of impact. When you talk about places like New York or Boston, [an entrepreneurial community] is already there. That’s been a little different — learning how to be accepted, be part of a community that’s much bigger.  But philosophically — and the way the program runs and the way we think about our founders as family — that stuff hasn’t changed. It’s important that when we invest in a startup that they’re part of our alumni, they’re part of our family long-term.

KH: Given the growing number of startup accelerators, there’s been some debate about their value. What do you think needs to be done to help startups figure out whether an accelerator is the right decision for them?

DC: I think entrepreneurs should demand transparency for startup accelerators. There are a lot of these programs now and it’s very difficult to know what they’ve done historically or even how they operate. I’d ask to see their full track record, and make sure you understand the equity deal they’re offering. I’d ask to speak with past founders that have been through the program. In short, do your own diligence.

KH: What does TechStars do to increase transparency?

DC: TechStars has actually released code that allows any accelerator to keep a list of companies from Crunchbase and it gives you all the statistics. We’ve been publishing the TechStars data fully since the beginning on TechStars.com. For every single company, you can see if it’s a failure, success, how much they raised. Entrepreneurs deserve that sort of transparency from accelerators and it’s not hard to do. Every VC lists their portfolio, right?  There are so many accelerators now that there’s got to be some measure of this is a good one or this is a bad one. I don’t think they’ll all perform well, and they’re certainly not all alike in the quality of people involved or in their results to date.

KH: From the outside, it looks like the founders of the current crop of TechStars are more diverse than the stereotypical, 20-something white guy – at least in New York. Are you seeing a difference in the kinds of founders who apply to TechStars nationwide?

DC: That’s certainly changed. Some of that is [related to] reputational effects around TechStars; some of that is the amount of funding we’ve offered over time. We’re seeing mentors who choose to put their next company through the program that they were a mentor in after seeing the value of it from the other side. We’re seeing third and fourth time entrepreneurs. That stereotype of it only being 22-year-old white dudes has definitely changed since the beginning. The first class was and it was disappointing on many levels. We didn’t have a single woman. It was almost all under 25-year-old white guys or a couple of Asian guys. Generally [it was] not very diverse. Now, we’re really proud to have five female CEOs [in New York]. The average [founder’s] age is creeping up every year of the companies we fund. We don’t ask those questions of the applicants but we’re somewhere around a 31-year-old average now.

KH: What’s contributing to the change?

DC: We’ve done a lot of things around diversity. We have this program called Rising Stars; we’re doing a Patriot Boot Camp for military veterans. A lot of it is outreach and it feels like it’s starting to work. I think it’s an issue that’s not talked enough about in the major markets, honestly. It’s talked about but people aren’t doing enough about it – you don’t see much action around it.

KH: People love to talk about the East coast, West coast rivalry in tech. But there’s a teeming tech hub here. What do you think defines the Boulder startup community?

DC: I think, on some level, it’s having a chip on your shoulder. San Francisco is a great startup community that you shouldn’t even try to model yourself after because it’s just special. And New York is obviously a great community for tons of things – financial startups and a million other things. [With] Boulder, you have a chip on your shoulder and you’re very conscious of being better and making yourself better, but you’re never going to be that. You don’t have that scale, you’re not a port. You play to your strengths and say ‘how do I make Boulder better every day.’ [It’s the] ‘give first’ attitude that Brad [Feld] talked about. It’s a smaller community, so the things you do to screw people matter and the things you do to help people matter and get noticed. I think it rejects bad actors really quickly and accepts, and makes part of the community, good actors. It’s a little bit of a small town dynamic.

KH: What are some of the trends you’re seeing among startups launching nationwide, in TechStars and elsewhere?

DC: Whatever last year’s hot startup was is the major trend. We see 50 to 100 apps every time for whatever [the last big thing was]. Groupon two years ago, Pinterest. That was the thing this year. We’re careful not to try to do derivative stuff because it’s not as interesting, but sometimes it can applied in other areas that the other company isn’t going after.

[Also], Web infrastructure startups. The Web is still too hard for people to build on top of. Things that really make it easier for developers to consume a service that used to be difficult or expensive – we’re seeing a lot of that.

People are starting to think about human-computer interfaces. Robotics. Also, ways of interacting with vast amounts of data that aren’t trackpads and mice and keyboards – the future of how we’re going to get to it. We’re seeing a little bit of an uptrend in hardware-related stuff or physical products combined with technology.

KH: At the New York Demo Day earlier this month, it seemed like more startups are trying to disrupt industries that haven’t yet been disrupted by technology. Does that speak to a broader trend?

DC: That might be somewhat of a reflection of me and I think [New York TechStars managing director] David Tisch. We both believe that boring is sexy sometimes. These big, lumbering industries that have very old technology… [are] controlled and dominated by a few groups. I’m in Uber and that’s a great example. Moveline is another. They’re just basically making efficiencies in markets, that haven’t adopted technology, that are very big. You see more of that because there have been physical examples of things that have worked, like Uber.

KH: After Facebook’s IPO, we’ve seen some cautionary comments from VCs. What do you tell startups looking to raise money?

DC: We’ve been saying the same thing for over a year now, which is it’s summer for startups. We’re in the up part of the curve. That’s great, but that won’t last forever. It probably means you need to think about an extension of the runway. If you have the opportunity to, raise a little bit more and get through that trough that’s coming, because it’s coming. It’s like any market. It’s not a bubble, it’s just a correction. They come and they go. It wouldn’t surprise me if that happened in the next year or two – at all. So you want to be ready for that. But I consistently tell [startups], ignore public market stuff. And Facebook is now a public company. The macro economy has very little to do with the angel investing and seed stage venture availability.

KH: Looking ahead, which areas do you expect to see the most growth?

DC: Some of the things I mentioned [earlier]. Human-computer interaction may be the one with the much longer arc. The big data opportunity combined with human computer interaction. We’re generating so much more data every year than has ever been created by humanity. It’s just an overwhelming amount of data. We need tools to deal with that, both visual interfaces and technology that can handle the raw amount of data. The other thing is that’s coming is body measurement, body instrumentation.

KH: Like the ‘quantified self’ idea?

DC: That’s real and you see little things like FitBit and those kinds of companies. How long is it going to be before we have a computer in ourselves. I actually don’t think that’s far off and it’s almost doable. It’s just around the corner. Sometimes things take 15-20 years to actually there but I think that’s the arc you have to think on as an investor.

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